PRESENT VALUES You have an opportunity to purchase a government security that will pay $200,000 in five years.

Required:

. Calculate what you would pay for the security if the appropriate interest (discount)

rate is 6 percent compounded annually.

. Calculate what you would pay for the security if the appropriate interest (discount)

rate is 10 percent compounded annually.

. Calculate what you would pay for the security if the appropriate interest (discount)

rate is 6 percent compounded semiannually.

Exercise